Broad Market Rally

Once we broke the downtrend (BLUE LINE) we rose up until the 2:00 FOMC minutes. There was some confusion after the minutes were published, but once the martket found some footing it continued to rise to an all time record close. It's likely we will continue the Fibonacci retracement 100% up to 1532.50 and are likely to continue higher today as we have open territory from here. If we do pull back to digust the huge gain yesterday we'd look at 1526.50 as our first level of support which is the 78.6% Fibonacci line and a point where the price spend a little bit of time yesterday.

SPX Breaks 5 Day Downtrend on 15m Chart

As you can see with the 11:30 bar we broke and held above the BLUE downtrend line. We'll now watch so see how the GREEN line supports as we get closer to the FOMC minutes 2:00pm EST. Watch for similar breakouts on the other indices we just talked about.

Wedge Action on the SPX, RUT, NDX, INDU

The past 5 days of trading have created some wedge-like formations on the 15m charts. I've posted all four so you can see some key pivot areas we're about to run into. In all cases the BLUE line is the downward trend that is acting as resistance. The GREEN line is the uptrend and SHOULD act as support on those indices that are likely to hold an uptrend. A break above the BLUE that holds will confirm a break of the downtrend and will initiate a new uptrend as long as it can hold the GREEN line.

SPX 5 Day 15m



NDX 5 Day 15m



RUT 5 Day 15m



INDU (DOW) 5 Day 15m

Holding at 1510

We actually opened up at 1510 and held that and went up close to our green line on the first 15m bar. The second 15m closed above the GREEN line (uptrend on the 15m) we talked about yesterday so bias thus far is sideways to up. Next key trendline to watch is the BLUE downtrend line of the 15m. If we can break and then hold above 1517.50, we might look for a first target of 1521.50. If we can't break above the BLUE than I'd look for 1510 to support again. Notice that this morning we did not close a body below yesterday's bottoming tails.

SPX Set to Open Down 8.50

The Chinese news has affected the futures more negatively then when I posted last night. We're set to open at about 1509, well below the green line we talked about last night. We'll be looking for our first support level at 1505.

The China vs. FOMC Tug of War or Exit Door?

Tomorrow we are certain to have a fun filled trading day. With the Chinese Market down over 6% at the time of this post and the FOMC publishing their minutes at 2:00pm EST we have the makings of some great potential fireworks. So far futures are down 5.25 on the S&P so an open right now would put us at 1513 which is below the 15m uptrend we started at Friday's bottom. If we hold and close the first 15m bar above that trendline (the Green one), then we could see some more chop until the FOMC minutes. At that point beware of a knee-jerk one way or another. Once the direction is confirmed, have fun. If we open lower and can't close the first bar above the Green trend then we have some likely support levels below -- 1514 has some good horizontal support, 1511.50 is the 23.6% Fibonacci, 1510 has good horizontal support, 1505 was Friday's low, 1500 is parked on the Daily Chart 30MA and was support prior to our last short term uptrend. Not much below 1500 until we hit 1492.50 so be careful there. On the upside, if the market decides to blow off the negativity in the Chinese markets AND likes the FOMC minutes our targets to the upside are first 1522, then 1526 before retracing back up to the highs of 1532.50. Remember, we still haven't seen our record SPX close yet so it may fight to stay up in this territory until it does. Sorry for the exessive lines on the charts, but in a chopping market like this it's a necessity for me. (Note that today's close couldn't make it above the BLUE downtrend line...watch that one tomorrow too) I went with a wider view today so you could see some of the horizontal support levels on the way down. Last but maybe most important, remember that we are still in an Uptrend. Be careful if buying puts as the market continues to bounce back up very quickly after all of these pull backs.

SPX 15m Chart

Shanghai Surprises

I'd like to pass on a link that you might find useful especially on those nights when you see futures down 5.00 (like tonight) and wonder might be causing it. I checked the SEE Composite (Shanghai Stock Exchange) and saw that it was down over 6% in Wednesday's trading. I'm not saying that there will always be a direct correlation, but on a day like today it will keep you from scratching your head too much.

Here's the link http://www.sse.com.cn/sseportal/en_us/ps/home.shtml